LondonMetric to acquire Highcroft Investments in £43.8m all-share deal

LondonMetric Property has announced its agreement to acquire Highcroft Investments in an all-share transaction valued at approximately £43.8 million. This strategic move, structured as a court-sanctioned scheme of arrangement, aligns with LondonMetric’s long-term objective of strengthening its position in logistics and retail warehousing real estate—two sectors experiencing sustained demand and strong rental growth.

Under the proposed acquisition, Highcroft shareholders will receive 4.65 new LondonMetric shares for each Highcroft share held. This offer values each Highcroft share at 842.1 pence, based on LondonMetric’s closing price of 181.1 pence per share on 26 March 2025. The valuation represents a 40.4% premium over Highcroft’s last traded price of 600.0 pence.

The agreement provides an opportunity for Highcroft shareholders to capitalize on this premium while gaining exposure to a larger and more liquid real estate investment trust (REIT). With LondonMetric’s strong dividend track record and sector-focused portfolio, the acquisition is expected to enhance long-term value for investors.

What does this deal mean for Highcroft shareholders?

Highcroft shareholders stand to benefit in multiple ways. Alongside receiving new LondonMetric shares, investors will retain a previously declared 35 pence per share interim dividend, payable on 16 May 2025. Additionally, those who hold their new shares post-acquisition will qualify for LondonMetric’s fourth quarterly dividend, set to be announced in May 2025 and distributed by mid-July 2025.

This transition also allows Highcroft shareholders to participate in LondonMetric’s larger, diversified portfolio, which is weighted heavily towards logistics (52%) and retail warehousing (27%). As market dynamics continue to favor these asset classes, investors could see stable rental income growth and improved capital appreciation prospects.

How does LondonMetric benefit from acquiring Highcroft?

LondonMetric has built its reputation as a leading UK real estate investment trust (REIT) by focusing on income-producing assets with strong tenant demand. The company’s long-term strategy emphasizes acquiring assets that deliver high occupancy rates, long lease terms, and reliable rental income growth.

This acquisition expands LondonMetric’s existing holdings in logistics and retail warehousing—two of the most sought-after real estate segments due to the rise of e-commerce, supply chain diversification, and urban last-mile delivery demand. LondonMetric’s existing portfolio boasts a 99% occupancy rate and a sector-leading weighted average unexpired lease term (WAULT) of 19 years.

By integrating Highcroft’s assets, LondonMetric aims to create operational efficiencies through portfolio consolidation and streamlined management. CEO Andrew Jones has already signaled plans to dispose of approximately 20% of non-core assets post-acquisition, reinforcing the company’s disciplined approach to portfolio optimization.

How has the stock market reacted to the acquisition?

Market sentiment towards the acquisition remains positive, particularly for Highcroft shareholders benefiting from the 40.4% premium offered. Highcroft’s stock has historically traded within a 52-week range of 587.50 GBp, and the deal presents an opportunity for shareholders to realize gains in a relatively illiquid stock.

LondonMetric’s stock, meanwhile, has seen fluctuations within a 52-week range of 170.80 GBp to 210.80 GBp, closing at 181.10 GBp before the announcement. Despite short-term volatility linked to the recent sale of 26.4 million shares by former LXi shareholders—following the expiration of a lock-up period related to its 2022 merger with Secure Income REIT—analysts maintain confidence in LondonMetric’s long-term strategy and dividend stability.

Should investors buy, sell, or hold LondonMetric and Highcroft shares?

For Highcroft shareholders, the recommended course of action is to accept the offer, aligning with the board’s unanimous recommendation. The 40.4% premium and access to LondonMetric’s larger, more liquid stock provide a compelling investment case.

For existing LondonMetric investors, the acquisition reinforces the company’s growth strategy and dividend sustainability. While the stock may experience short-term fluctuations due to recent share sales and market conditions, analysts suggest holding shares for long-term value. New investors may want to monitor price movements post-integration before making entry decisions.

What happens next in the acquisition process?

The acquisition will be implemented via a court-sanctioned scheme of arrangement, requiring approval from at least 75% of voting shareholders at the upcoming Court Meeting and General Meeting. LondonMetric has already secured irrevocable commitments from Highcroft directors and key investors, representing 60.2% of the issued share capital.

A Scheme Document, containing financial details, property valuations, and shareholder voting instructions, will be published within the next month. If the required approvals are obtained, the acquisition is expected to be finalized by 21 May 2025.

While currently structured as a scheme of arrangement, LondonMetric retains the flexibility to pursue a takeover offer if needed. The deal will proceed in compliance with the UK Takeover Code and other relevant regulations.

What does this acquisition signal for the UK real estate sector?

LondonMetric’s move to acquire Highcroft reflects a broader industry trend of REIT consolidation amid evolving market conditions. As real estate investment trusts seek scale, operational efficiency, and sector-focused growth, mid-sized REITs like Highcroft face increasing pressure to merge with larger players.

The UK logistics and retail warehousing sectors continue to attract institutional capital due to structural demand drivers, limited supply, and high barriers to entry. With e-commerce and supply chain optimization reshaping tenant requirements, large-scale REITs with strong asset management capabilities—such as LondonMetric—are well-positioned to capitalize on these trends.

As the market reacts to this latest consolidation, investors will closely watch how LondonMetric integrates Highcroft’s portfolio and executes its post-acquisition asset repositioning strategy. With a proven track record in income-led property investment, LondonMetric remains a key player in the UK’s evolving REIT landscape.